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Two little (little-ish) words

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  • Yes, it is Fed day, but Europe has some interesting central bank issues. Sweden took rates to zero yesterday. The ECB is issuing its bank lending survey - the failure of banks to lend at a price at which borrowers wish to borrow is a significant constraint on growth.
  • One hope for Euro area is that large companies (whose profits are favoured by ECB policies) may offer more intercompany credit - but that will not show up in today's data. Meanwhile the effects of Bank of England tightening (regulatory) may appear in today's UK credit data.
  • The US FOMC is expected to keep tapering and leave "considerable period" in the statement. This is what modern economics is reduced to - fretting over whether two words (albeit multi-syllabled words) are included in a statement. Economic growth continues OK, so this seems the most appropriate response.
  • Japanese industrial production was somewhat stronger than expected, bouncing back after a weak August. The auto sector was a driver of the surprises in the data, and as Japanese auto sales are falling this could imply better international demand.

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